When Considering a Vacation Home
Buy it for the right reason
The Realtors association surveys find that the primary motivation for a vacation home purchase is vacationing. And many experts think that’s the best way to approach the deal. Rental income is so unpredictable it should be viewed as gravy, they say, and buyers certainly shouldn’t rely on it to cover their mortgage and other expenses. And the market is too unpredictable to expect to profit on a sale.
The approach with the fewest risks, many experts say, is for buyers to pick a place they will enjoy and focus on that as their top priority.
“Our buyers today are buying for a number of reasons, with the No. 1 reason being lifestyle and use,” says Nick Cassini, senior vice president of sales and marketing for Four Seasons Private Residences in Anguilla.
John Banczak, executive chairman of Turnkey Vacation Rentals, a property-management company, says that people who buy as a lifestyle choice “are the people that realize they love spending time in one place, may even retire there, have done the research and made the decision a second home is for them. Getting additional revenue through rentals is the icing on the cake.”
Purchasing Close to Home
Another aspect of location to consider: how far the spot is from the owners. The National Association of Realtors says 57% of vacation properties are at the beach or lake, with the median distance 200 miles from home—far enough to require spending money for a manager and caretaker. Little chores an owner would do himself or herself at home can thus get costly.
“In our experience, living close is really helpful if something goes wrong, but there are a huge number of services out there to hold keys, offer concierge services or otherwise help if you live further away,” says Laura Hall, communications director for Kid & Coe, a vacation-rental website. “So anything is possible if you’re willing to pay for it.”
Beware Buying a Property with the Intent to Sell it
Experts warn that only a reckless buyer expects a vibrant market every year. From the end of 2007 through 2012, primary-home prices dropped by 14.8%, vacation properties by 23%, the Realtors’ group says. Sales of vacation homes dropped in 2016 to 721,000, off 21.6% from the 920,000 in 2015. Mr. Cassini says there are fewer speculators in today’s market compared with the pre-recession boom.
